10-QPeriod: Q1 FY2022

DOW INC. Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 22, 2022For Securities:DOW

Summary

Dow Inc. reported strong first-quarter 2022 results, with net sales reaching $15.3 billion, a 28% increase year-over-year, driven by a significant 28% rise in local prices across all operating segments and regions. This price appreciation was primarily attributed to tight supply and demand dynamics and rising raw material costs. While volume saw a modest 3% increase, the company effectively leveraged higher pricing to boost profitability. Net income available for common stockholders surged to $1.57 billion ($2.11 per share), a substantial improvement from $991 million ($1.32 per share) in the prior year's quarter. The company also demonstrated robust operational cash flow generation, with $1.6 billion in cash provided by operating activities, a significant turnaround from the prior year's usage. Dow returned capital to shareholders through $600 million in share repurchases and a $0.70 per share dividend, signaling confidence in its financial health and commitment to shareholder returns. The company also incurred $186 million in asset-related charges due to the Russia-Ukraine conflict, impacting profitability but not fundamentally altering the overall positive financial performance.

Financial Highlights

51 data points
Beta

Revenue

$15.26B

18.8% Gross Margin

Net Income

$1.56B

10.2% Net Margin

EPS (Diluted)

$2.11

Total Assets

$63.34B

Cash & Equivalents

$3.21B

Free Cash Flow

$1.60B

Financial Statements
Beta
Revenue$15.26B
Cost of Revenue$12.40B
Gross Profit$2.86B
SG&A Expenses$498.00M
Operating Income$1.55B
Interest Expense$167.00M
Net Income$1.56B
EPS (Basic)$2.12
EPS (Diluted)$2.11
Shares Outstanding (Basic)734.60M
Shares Outstanding (Diluted)739.80M

Key Highlights

  • 1Net sales increased by 28% to $15.3 billion, driven by a 28% increase in local prices across all segments.
  • 2Net income available for common stockholders more than doubled to $1.57 billion, or $2.11 per diluted share, from $991 million, or $1.32 per diluted share, in the prior year.
  • 3Operating cash flow improved significantly, with $1.6 billion generated in Q1 2022, compared to a cash usage of $291 million in Q1 2021.
  • 4The company repurchased $600 million of its common stock during the quarter, demonstrating a commitment to returning capital to shareholders.
  • 5A quarterly dividend of $0.70 per share was declared and paid, consistent with prior periods.
  • 6Asset-related charges of $186 million were incurred due to the Russia-Ukraine conflict, impacting profitability.

Frequently Asked Questions

The primary driver of Dow's revenue growth was a substantial increase in local prices, up 28% year-over-year across all operating segments and geographic regions. This was largely due to tight supply and demand dynamics and rising raw material costs in the chemical industry.

The conflict resulted in $186 million in pretax asset-related charges in Q1 2022, primarily due to the write-down of inventory, recording of bad debt reserves, and impairment of other assets. While this impacted profitability, Dow stated that the conflict had not had and was not expected to have a material impact on the company's overall financial condition or results of operations.

Dow returned capital to shareholders through share repurchases and dividends. In Q1 2022, the company repurchased $600 million of its common stock and paid a quarterly dividend of $0.70 per share. Dow's strategy aims to return approximately 45% of operating net income through dividends and approximately 65% in total shareholder remuneration, including share repurchases, over the economic cycle.

Dow experienced a significant improvement in operating cash flow. Cash provided by operating activities was $1.6 billion in Q1 2022, a substantial increase from the $291 million used in Q1 2021. This improvement was driven by increased earnings and a decrease in elective pension contributions compared to the prior year.